[2022] 1 LNS 660 Legal Network Series

DALAM MAHKAMAH TINGGI MALAYA DI PULAU PINANG

DALAM NEGERI PULAU PINANG
[RAYUAN SIVIL NO. PA-12BNCVC-5-01/2020]

ANTARA

SURE COMMERCE SDN BHD

(816150-K) … PERAYU

DAN

1. SOON CHIN CHYE

2. LEE FENG SOON

3. NG THEAN GIN

4. HU SHU-FENG

5. TAN CHEAN PHEEN

6. TAN HONG SONG

7. TAN CHEAN PHEEN

8. LIM LEE HOON

9. OOI KUAN YONG

10. LOH YEOK CHUAN

11. LOH BEE HOON

12. TOH GIAP CHYE

13. SHERINE FOO SIEW MAY

14. LOH SAW HOON

15. LOH YOK YEONG

1
[2022] 1 LNS 660 Legal Network Series

16. EILLIAN LOONG

17. YEOH GUAN PHENG

18. YEOH WAN CHEANG

19. LEE AI PIN

20. OOI YEOW PENG

21. OOI KIM BENG

22. THAM WOOI LOON

23. LEE HENG GEE

24. QUAH JU HUI

25. JOSEPH CHAI CHEONG KUI

… RESPONDEN-RESPONDEN

ALASAN PENGHAK1MAN

[1] In the court below, the learned Sessions Court Judge allowed the
respondents/plaintiffs’ claim and dismissed the counterclaim by
the appellant/defendant. The parties are referred to as they were
in the court below. Having heard the appeal, I allowed the
defendant’s appeal in part.

[2] The brief facts are as follows. The defendant was the developer
of Jazz Hotel and commercial suites known as the Jazz Suites
(“suites”). The plaintiffs were the purchasers of the suites.
Seventeen of the plaintiffs entered into the Sale and Purchase
Agreements (“SPAs”) with the defendant in August 2012 and two
of them in 2013. All the SPAs except the SPA for Suit 155 provide
for delivery of vacant possession within 36 months from the
completion of the piling works (clause 26) while the SPA for Suit
155 provides that vacant possession to be delivered within 36

2
[2022] 1 LNS 660 Legal Network Series

months from the date of the agreement. The Certificate of

Completion and Compliance for the suites was issued on
21.4.2017 while the common facilities were completed sometime
in December.

[3] The plaintiffs brought the action in the court below claiming for
Liquidated Ascertained Damages (“LAD”) for late delivery of
vacant possession for the suites until 21.4.2017 and common
facilities until it was December 2017 and to be refunded of the
Goods and Services Tax (“GST”) which had been paid. The
defendant in their counterclaim sought for the outstanding GST
against the plaintiffs in Suits 123 - 128, 131, 135, 139 and 192;
late payment interest on GST against plaintiffs in Suits 122, 129
- 130, 132 - 134 and 141; outstanding service charges and sinking
fund against plaintiffs in Suits 125 and 192; late payment interest
on service charges and sinking fund against plaintiffs in Suits
122, 129, 133 - 134 and 141; and late payment interest on progress
billings against plaintiff in Suit 192.

[4] The main contention between the parties before the Sessions
Court was whether the Housing Development (Control and
Licensing) Act 1966 (“HDA”) was applicable and the
determination of the date of the delivery of vacant possession.
The plaintiffs in Suits 123 - 124, 128, 130 - 132, 135 and 139
however had accepted the payments for LAD in respect of their
suites under the SPAs. While plaintiffs in Suits 123 - 124, 131,
135 and 139 had accepted the payments for LAD in respect of the
common facilities under the SPAs.

Decision of the Sessions Court

[5] The learned Sessions Court Judge (“SCJ”) in allowing the

plaintiffs’ claim for LAD in respect of the late delivery of vacant
possessions of their units and common facilities held that the

3
[2022] 1 LNS 660 Legal Network Series

suites were residential units pursuant to the definition of housing

development and housing accommodation hence the SPAs were
governed by the HDA. In addition, the learned SCJ allowed
several declarations inter alia, that the plaintiffs should not be
paying the GST and the defendant to refund the payments already
made by some of the plaintiffs and some other consequential
orders.

Issues and analysis

[6] it was submitted by the learned counsel for the defendant that the
learned SCJ applied the wrong burden of proof. According to the
learned counsel the plaintiff should bear the burden in proving the
claim that the suites are of residential category.

[7] In dealing with the issue of burden the learned SCJ was addressing
the issue of the SPAs where four plaintiffs were offered housing
loan by the bank as opposed to commercial loan offered to the
rest of the plaintiffs. The learned SCJ opined that the burden was
on the defendant to prove that despite being offered housing loans
the loans were actual commercial in nature. He concluded that the
defendant failed to discharge this burden and concluded that as
there was a lacuna the suites purchased by the four plaintiffs were
of housing accommodation or housing development subjected to
the Act.

[8] it was the plaintiffs’ pleaded case that the suites are residential
and not commercial and that the HDA is applicable. Clearly the
burden was on the plaintiffs to discharge. Once discharged the
burden will shift to the defendant to prove otherwise. I suppose
when he said that there was a lacuna the learned SCJ must have
meant that the evidence was wanting from the defendant to show
that the housing loans offered to the four plaintiffs were in fact
commercial loan. But what about the fifteen other plaintiffs who

4
[2022] 1 LNS 660 Legal Network Series

signed up for commercial loans? To my mind when the learned

SCJ concluded that there was a lacuna, he was not entitled to
decide in favour of the plaintiffs.

[9] The learned counsel for the defendant further submitted that the
learned SCJ was wrong to hold that the HDA was applicable
regardless of whether the development was commercial or
residential. He argued that the suites were not residential as they
were categorised as commercial units, thus the HDA has no
application. He referred to the Approved Planning Permission and
Building Plans which described the development as a commercial
development. Further reference was made to the preambles of the
SPAs and the Deed of Mutual Covenants (“DMC”) which
described the suites as commercial suite and commercial space
respectively.

[10] The learned counsel for the plaintiffs submitted that the
development has more than four units of housing accommodation
and it was partly for human habitation and partly for business
premises. Therefore, the learned SCJ was not in error in applying
the definitions of housing accommodation and hosing
development under section 3 of the HDA.

[11] It is not a disputed fact that the assessment tax, water rate and
sewerage are chargeable according to commercial rates and not
residential. Housing accommodation under section 3 of the HDA
is defined to include building constructed partly for human
habitation and partly for business premises. At first glance it
appears that the suites are residential but when the rates
chargeable for the utilities and assessment tax are at commercial
rates l do not think the suites fall within section 3 of the HDA.

[12] The interpretation of section 3 by the learned SCJ was flawed in

that he misunderstood the explanation given during the debate in
the Dewan Rakyat. The correct interpretation of section 3, to my

5
[2022] 1 LNS 660 Legal Network Series

mind, is found in the case of Ho, Christopher Wen Jinn v. Berjaya

Times Square Sdn Bhd [2011] 7 MLRH 720. The plaintiff sought
the court to declare that the commercial unit he purchased as
housing accommodation therefore subject to the HDA. Mohamad
Ariff Md Yusof J (as he then was) at p.722 said:

“With respect, the Plaintiffs interpretation of section 3 is a

strained one, nor is it a reasonable construction bearing in mind
the purpose of the amendment. Even the literal rule of
interpretation cannot be allowed to result in an absurd conclusion.
I have borne in mind what was said in the Dewan Rakyat by the
then Minster of Housing and Local Government in moving the
amendment bill:

‘... Kerajaan juga menyedari masalah pemajuan service

apartment rumah kedai yang dibangunkan di atas tanah
komersial dan tidak tertakluk kepada mana-mana
perundangan yang berkuatkuasa manakala perjanjian jual
beli tidak terikat dengan mana-mana format yang seragam.
Oleh itu pihak pembeli tidak ada tempat mengadu apabila
pemaju tersebut bermasalah. Bagi mengatasi masalah ini,
takrif “housing accommodation” di bawah seksyen 3
dipinda meliputi pemajuan perumahan di atas tanah
komersial yang mana selama ini Akta 118 hanya terhad
kepada tanah lot perumahan dan bangunan sahaja.’

The stress is on housing accommodation throughout, not

commercial development. It is evident that the Act protects
residential units, not commercial units, and it will be an unnatural
strain on statutory language to construe housing accommodation
to include commercial premises.

The Plaintiff is not the occupant of residential premises at all.

Indeed he is contractually prevented from using the premises for
residential purposes. The mischief sought to be prevented by the

6
[2022] 1 LNS 660 Legal Network Series

amendment is the previous defect in the law whereby if any

housing accommodation is constructed on commercial land, and
where in such a case, the development is a mixed development,
the residential units (apartment rumah kedai, in particular) are not
protected by Act. It cannot be the statutory intention to include
commercial premises within the scope of protection.”.

[13] Likewise here, I have no doubt that notwithstanding that the suites
were for human habitation but for all intent and purposes they do
not fall within the definition of housing accommodation. This
development was not a mixed development as envisaged in the
amendment. The approval by the authorities clearly described it
as commercial development. More so when the rates chargeable
for the utilities and assessment tax are commercial rates.

[14] I agree with the learned counsel for the defendants that the learned
SCJ ignored the contemporaneous documents in arriving at his
conclusion and this amounts to an appealable error (see Quart
Teik Sdrt Bhd v. Hj. Mohd Noor Hj Yaacob & Ors [2000] 4 CLJ
324 and Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd
[2015] 2 MLJ 441)

[15] Therefore, to my mind there is no significance as regards the issue

of the housing loan offered to the four plaintiffs as opposed to
commercial loan for the rest. Furthermore, the type of loan
offered was between the four plaintiffs and the bank which cannot
be a determinative factor whether the development was residential
or commercial. Therefore, I agree with the defendants that the
learned SCJ was in error in concluding that the SPAs were subject
to the FIDA and that clauses 26, 27 and 28 of the SPAs were
illegal and in contravention of the law.

[16] Thus, it is my judgment that the vacant possession for the suites
and the common facilities in respect of the all suits except Suit
155 should be delivered within 36 months from the date of

7
[2022] 1 LNS 660 Legal Network Series

completion of piling works. As regards Suit 155 vacant

possession of the suite should be delivered within 36 months from
the date of the SPA and 36 months from the date of completion of
piling works for the common facilities. In short, the claim for
LAD should be in accordance with the provisions of the SPAs
which are not governed by the HDA.

[17] It was further submitted that the learned SCJ erred in not allowing
the defendant’s counterclaim to claim for GST against the
plaintiffs. The plaintiffs relied on clause 25 of the SPAs. The
learned counsel for the defendant submitted that the learned SCJ
erred in concluding that clause 25 prevented the defendant from
being indemnified by the plaintiffs for the GST.

[18] In this regard I agree that the plaintiffs can seek refuge under
clause 25. It was pointed out that defendants sought to be
indemnified on the purchase price therefore it was argued that
clause 25 has no application. The case of Mandarin Pavilion Sdn
Bhd v. Chang Vui Lun & Anor [2019] 2 CLJ 22 was referred to by
the learned counsel for the plaintiffs in contending that the
defendant cannot be indemnified.

[19] Clause 25 reads:

“The purchaser shall not be liable to indemnify the Vendor in the

event of an introduction of new laws or the amendment of existing
laws which shall impose on the vendors additional fees, charges
or taxes, the payment of which shall be necessary for continuing
and completing the development of the said development or of
any part or parts thereof in accordance with the Building Plan and
description therein referred to and the due observance and
performance by the Vendor of its obligation and liabilities
hereunder.”.

8
[2022] 1 LNS 660 Legal Network Series

As decided by the Court of Appeal in Mandarin Pavilion (supra) GST

was imposed on the developer and they cannot make the purchasers to
pay for the same nor be indemnified as it was not provided for in the
sale and purchase agreement. Therefore, it my view that the defendant
is not entitled to be indemnified and whatever payments that they had
collected from the plaintiffs must be refunded. I do not see any
difference in arguing that the claim was for GST on the purchase price.
For all intents and purposes, it is necessary for continuing and
completing the development, howsoever described.

[20] As regards outstanding service charges and sinking fund against

plaintiffs in Suits 125 and 192; late payment interest on service
charges and sinking fund against plaintiffs in Suits 122, 129, 133
- 134 and 141; and late payment interest on progress billings
against plaintiff in Suit 192 I agree that these claims have nothing
to do with GST. They are independent payments that the plaintiffs
need to pay in accordance with the provisions of the SPAs. The
learned SCJ was wrong in tying up these payments with the GST
issue. Therefore, I allow the defendant’s counterclaim for these
outstanding charges and fate payment interest on the service
charges and sinking fund as well as on the progress billings
against the respective plaintiffs.

[21] The plaintiffs in Suits 123, 124, 128, 130, 131, 132, 135 and 139
had entered into settlement agreements therefore, they are barred
from initiating this action against the defendant (see Oxbridge
Height Sdn Bhd v. Abdul Razak Mohd Yusof & Anor [2015] 2 CLJ
252).

Decision

[22] The defendant’s appeal is allowed in part and parties to bear their
own costs.

9
[2022] 1 LNS 660 Legal Network Series

(TUN ABD MAJID TUN HAMZAH)

Hakim
Mahkamah Tinggi Malaya, Pulau Pinang

Dated: 11 APRIL 2022

COUNSEL:

For the applicant - M/s Presgrave & Matthews

Peguambela dan Peguamcara
Tingkat 1, No. 2 Lebuh Pantai
10300 PULAU PINANG

Tel : 04-2626155
Faks : 04-2626160

For the respondents - M/s Phee, Cheini & Ung

Peguambela dan Peguamcara
11B, Jalan Tavoy
10050 PULAU PINANG

Tel : 04-2291932
Faks : 04-2275933

Case(s) referred to:

Ho, Christopher Wen Jinn v. Berjaya Times Square Sdn Bhd [2011]
7 MLRH 720

Quart Teik Sdrt Bhd v. Hj. Mohd Noor Hj Yaacob & Ors [2000] 4
CLJ 324

Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 MLJ 441

10
[2022] 1 LNS 660 Legal Network Series

Mandarin Pavilion Sdn Bhd v. Chang Vui Lun & Anor [2019] 2 CLJ
22

Oxbridge Height Sdn Bhd v. Abdul Razak Mohd Yusof & Anor [2015]
2 CLJ 252

Legislation referred to:

Housing Development (Control and Licensing) Act 1966, s. 3

11